There is much to be discussed about remortgages and secured loans and finding the best financial solution for your kind of situation. For all the things that you need to know about secured loans and remortgages before making any financial move, read on. For quite some time, a lot of people considered remortgages as a cheap method of raising money. One of the reasons why most people thought so is that interest rates that you can acquire on a mortgage are lower than those you acquire from an unsecured loan. Unfortunately, many financial experts advise against remortgaging today to raise money because of the changes brought about by the Financial Services authority and increased regulation. For these financial experts, there are more instances when a secure loan will be a wiser and better financial option than a remortgage.
A good example for this is when mortgage borrowers will have to deal with huge redemption penalties on their current mortgage. Borrowers acquire penalties when they express to switch lenders or decide to only pay off their mortgage at a period when rates are cheap. Keep in mind as well as that the terms and conditions between lenders are not similar. Your penalties can go as high as 7% of your outstanding mortgage balance from you fixed rate mortgage if you get them during the period of fixed rate.
For you to know which is the most financially sound decision between secured loans and remortgages, you have to consider the overall loan cost. If you want to compare between these two financial options and take associated charges and fees into account, then the APR is the perfect tool for you. If you are going to process a remortgage, there are different fees that are involved, namely, administration and valuation fees, broker fees, lender fees, and in some scenarios, legal fees. On the other hand, with secured loans, you will only be dealing with very few additional fees, which often encompasses only the lender’s arrangement fee as well as a broker’s fee.
Based on financial expert advice, you can find out which financial solution benefits you the most when you compare secured loans with the total remortgage process costs. Borrowers who have a poor credit history can benefit from this method. For mortgages taken out before facing any credit problems, getting extra cash through a remortgage may mean paying a higher interest rate for your total mortgage. On the other hand, as a borrower of secured loans, you can take advantage of a prime interest rate from your mortgage. Additionally, only a non-conforming rate will be charged to you on your new loan.
When you decide between the two financial options, you also need to look into the speed by which the additional funds will be given to your account. Typically, funds for secured loans are much faster to obtain than those from a remortgage.